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Becoming a Freelancer in Japan

A step-by-step guide for foreign residents transitioning from employee to self-employed (Kojin Jigyo) in Japan. Visa considerations, business registration, tax setup, and the powerful Blue Form ¥650,000 deduction.

Quick checklist

  1. Verify your visa permits self-employment (Engineer/Specialist visa: limited; PR/Spouse: yes; "Business Manager": yes)
  2. File Kaigyo Todoke (Opening Declaration) within 1 month of starting business
  3. File Aoiro Shinkoku Shonin Shinseisho (Blue Form Approval Application) within 2 months
  4. Switch from Shakai Hoken to NHI + Kokumin Nenkin at your ward office
  5. Get a business bank account (separate from personal)
  6. Set up accounting software (freee, MoneyForward Cloud, etc.) — needed for Blue Form 65万 deduction
  7. Get a My Number Card for e-Tax filing

Visa considerations

  • Permanent Resident (PR) / Spouse of Japanese / Long-term Resident: full self-employment freedom
  • Engineer / Specialist in Humanities: officially tied to a sponsoring employer. Side freelancing is generally permitted but requires "Permission to Engage in Activity Other Than Permitted" from Immigration
  • Business Manager visa: designed for company-running foreigners; requires capital, office, etc.
  • HSPRO (Highly Skilled Professional): more flexibility for side activities
  • Investor / Working Holiday / Student: very restricted, generally not appropriate for full freelancing

Before quitting your job, consult Immigration to ensure your visa allows the change. Specialized immigration lawyers (Gyoseishoshi) can help.

Step 1: Open Business Declaration (Kaigyo Todoke)

  • Form: Kojin Jigyo no Kaigyo Todoke (Opening of Personal Business)
  • Where: your local tax office (Zeimusho)
  • When: within 1 month of starting business
  • Cost: free
  • Bring: My Number, Residence Card, address proof
  • Why important: required for Blue Form approval, often needed by clients

Step 2: Blue Form Approval (Aoiro Shinkoku)

The "Blue Form" tax filing system is essential for serious freelancers — it provides massive deductions and benefits.

  • ¥650,000 Special Deduction (Aoiro Tokubetsu Kojo) — if you use double-entry bookkeeping + file electronically (e-Tax)
  • ¥550,000 deduction — if you skip e-Tax but use double-entry
  • ¥100,000 deduction — simple single-entry bookkeeping
  • Loss carryover: business losses can offset future income for 3 years
  • Family member salary deductibility: pay spouse / parents for legitimate work
  • Apply within 2 months of opening declaration (or by March 15 for current year)

Bookkeeping requirements

  • Use accounting software (freee, MoneyForward Cloud, Yayoi Aoiro Online)
  • Maintain general ledger, journal, balance sheet, P&L
  • Keep all receipts and invoices for 7 years
  • Cloud software auto-generates reports for tax filing

Step 3: Switch social insurance

When you leave your employer, you lose Shakai Hoken. You must switch within 14 days:

  • Kokumin Kenko Hoken (NHI): enroll at ward office. Premium based on previous year income — can be expensive after a high-income year
  • Kokumin Nenkin: ¥17,510/month (FY2026 estimate)
  • Add-on: Add付加年金 (Fuka Nenkin): ¥400/month adds ¥200 × months paid to your future pension — pays for itself in 2 years
  • Alternative: Stay on Shakai Hoken for up to 2 years via "Nin'i Keizoku" (Voluntary Continuation) — full premium amount (no employer split), but can be cheaper than NHI

Step 4: Open a business bank account

  • Personal account with separate purpose: easiest; many banks allow naming "Kojin Jigyo" account
  • Online banks (best for freelancers): GMO Aozora, PayPay Bank, Rakuten — opening online possible
  • Foreign-friendly: SBI Net Bank, Shinsei, Prestia (SMBC Trust)
  • Documents: Residence Card, My Number, Kaigyo Todoke acknowledgment, address proof
  • Why separate: simplifies bookkeeping, looks professional to clients, required for some accounting software auto-import

Step 5: Invoicing in Japan

Standard invoice elements

  • Your business name & address
  • Client name & address
  • Date of issue
  • Itemized services & amounts
  • Subtotal, consumption tax (if applicable), total
  • Bank transfer details
  • Withholding tax notation (if applicable for certain professions)

Withholding tax (Gensen Choshu)

For certain professions (writers, designers, photographers, lecturers), clients withhold 10.21% (or 20.42% over ¥1M) and remit to tax authorities. Recover via annual tax filing if over-withheld.

Invoice (Inboisu) System — 2023 update

Since October 2023, businesses purchasing from you can only claim consumption tax credit if you're a "Qualified Invoice Issuer" (Tekikaku Seikyusho Hakkogyosha). Required to register if your sales exceed ¥10M, optional if smaller (but may impact who hires you).

Tax filing as freelancer

  • Annual income tax: file by March 15 of the following year (e-Tax or paper)
  • Consumption tax: required if sales exceed ¥10M in 2 years prior, or if registered for Invoice system. File by March 31.
  • Quarterly estimated taxes (Yotei Nozei): required if last year's tax was ¥150K+. Pay 1/3 each in July and November.
  • Local business tax (Kojin Jigyozei): 3-5% on profit over ¥2.9M. Paid Aug/Nov to prefecture.
  • Resident tax (Juminzei): 10% of taxable income. Paid in 4 installments (June, Aug, Oct, Jan).

Deductions and tax-saving tools

  • iDeCo (private pension): ¥68,000/month for self-employed → ¥816K/year deductible
  • Small Business Mutual (Shokibo Kyosai): up to ¥70K/month → ¥840K/year deductible — retirement-style savings
  • Business expenses: home office portion of rent/utilities, professional development, transport, equipment
  • National Pension Fund (Kokumin Nenkin Kikin): alternative to iDeCo (shared ¥68K limit)
  • Earthquake/Life/Medical insurance: each up to ¥40K deduction

Combining iDeCo + Small Business Mutual + Blue Form deduction can save ¥1.6M+/year in tax-deductible contributions.

Common questions

Q. Can I freelance on a Working Visa while keeping my main job?
Yes, with approval. File the "Permission to Engage in Activity Other Than Permitted" with Immigration. The side activity should be related to your visa category, generally.
Q. Should I register for the Invoice (Inboisu) system?
If your clients are businesses (B2B), yes — they may not work with non-registered freelancers. If consumer-focused (B2C), often unnecessary unless sales exceed ¥10M. Pros: more clients; cons: now you collect/remit consumption tax.
Q. When does it make sense to incorporate (法人成り)?
Generally when taxable income exceeds ¥8M-10M, since corporate tax (~23.2%) becomes lower than personal income tax. Other factors: client requirements, social insurance, retirement planning.

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